The iconic dealer: The legend of Fred Beans on wealth, succession, future of America

Welcome to another episode of the Car Dealership Guy Podcast.

On today’s edition, Fred Beans, founder and CEO of the Fred Beans Automotive Group, discusses his iconic career in the car business, wealth-building tips from Warren Buffet, the journey from farmhand to dealership mogul, his succession plan, and much more.

You can stream the full episode now on YouTube, Spotify, or Apple.

1. Fred’s upbringing and early career.

Fred Beans got his start in the car business on the service side before transitioning into retail. His interest in vehicles originated from working on tractors at his family’s farm and making trips to a farm equipment dealer with his father. After graduating college, he worked at a service station, leveraging the mechanical knowledge he had obtained during his upbringing. Eventually, the company’s owner decided he wanted to retire and Fred got the opportunity to purchase the business. He recalls convincing BP Oil to offer him a $5,500 loan by having his mother co-sign a note, despite the company not knowing he was only 20 years old and had little capital of his own.

2. An outsider in the car industry.

Fred’s chance to transition into car sales came in the form of a partnership with a dealer named Bill Marsh. The two had gotten to know each other through their work in the industry, and soon Bill offered his friend a 25% stake in a small storefront, which Fred would manage. He notes that getting into the industry back then was challenging as an outsider, as you either needed substantial capital or family ties to the business. Thanks to being on good terms with an assistant zone manager at Oldsmobile, Fred was able to find a dealership interested in selling to him and got approval from the manufacturer. Today, however, he feels that it is even more difficult to become a dealer without being related to someone in the retail auto space first.

3. The power of reinvestment.

Growth requires reinvestment, a fact which Fred takes seriously. “Let's say we made 100,000 and we're going to put away 30,000 for taxes, then we'd have 70,000 left over. We'd add back depreciation and divide it by two. And we've saved basically every month 50% of our earnings so that we have money to reinvest,” he explains. This, coupled with careful management of his own finances, has helped him create the largest parts business in the U.S., while his dealership group has expanded to include 27 stores and six collision centers.

4. Competitive branding.

For Fred, branding is a promise, a guarantee that the business will offer the same quality experience regardless of who it is serving. However, he notes that there is so much competition today that it can be challenging to differentiate oneself from the rest of the market. To ensure customers stayed loyal to his brand, Fred prioritized building connections with customers, going so far as to display his personal cell number on sales desks, so that unhappy buyers could contact him with their issues. This helped create a sense of loyalty, even among frustrated shoppers, resulting in long-term success.

OPENLANE - The world’s best online dealer marketplace for used cars, bringing you exclusive inventory, simple transactions, and better outcomes. New to OPENLANE? Sign up now and receive a $350 buy fee credit. Learn more at www.openlane.com.

Uber for Business - With Central, you can request a ride on behalf of your customers even if they don’t have the Uber app. If you’re ready to reduce the costs associated with maintaining shuttles and limit the liability of loaner vehicles, it's time to partner with Uber. Visit t.uber.com/CDGauto today. 

Car Dealership Guy News - The #1 source for concise and unbiased car industry news. Stay informed with the most relevant and interesting stories by visiting news.dealershipguy.com.

5. Making an impact.

Fred believes that businesses should strive to make a positive impact on their community and employees. He expresses concern for the current state of the country, arguing that young people today aren’t being raised in good homes. To rectify this and to solidify his own legacy, Fred ensures his dealership provides all the resources his workers need to live a happy and healthy life, offering assistance with everything from education to wellness.

6. The disadvantage of online sales.

Roughly 70% of the Fred Beans Automotive Group sales are derived through internet leads. But while the internet is an important resource for his business, Fred feels uncomfortable with the industry’s reliance on digital retail. Over the last few decades, he has noticed that people are driving from further and further away to purchase from his dealerships, a trend fueled by online shopping capabilities. Unfortunately, those who shop from out of town are less likely to be repeat customers. Building loyalty among such buyers requires dealers to nail their in-store experience, even though they only have one chance to do so.

7. Opportunities in parts supply.

Car dealers have so many opportunities for growth, whether in the form of expanding their current business or branching out into other ventures. One opportunity that Fred has leveraged to great success is the parts business. He explains that he was able to become the country’s biggest part retailer thanks to the fact that the parts market is much more measurable than standard auto sales. Currently, his parts division employs more than 370 workers.

8. Is it harder to sell cars today?

Fred believes that the easiest days of the car business are behind the industry. Customers are overwhelmed by choice when it comes to shopping for cars. Dealers must work much harder to compete and exceed shopper expectations. But while the industry is more challenging, he doesn’t see a world where automakers will ever control the sales process. This is because dealers are so closely integrated into their communities, contributing heavily to a variety of societal aspects including politics. Their knowledge of the local market makes them far better equipped to sell vehicles than a manufacturer.

9. Technology pitfalls.

Technology has always been an integral component of Fred’s business ventures. He explains that his dealership group was probably the first in the state of Pennsylvania to install computers at every desk. However, innovation isn’t always a good thing. Fred admits that artificial intelligence (AI), while intriguing, makes him anxious. While he has continued to experiment with AI and believes it could be useful in a dealership setting, he notes that there are certain tasks that should always be controlled by humans. Failing to keep the human touch in the car sales process will erode trust in dealers. He also feels that modern technology is having a detrimental effect on society’s work ethic and on the individual drive to grow as a person.

10. Invest locally.

Fred urges dealers to invest in their local markets before expanding into more regions. To build a sphere of influence, one must strengthen relationships with those nearby he explains. Concentrating on the communities closest to its stores has allowed his own group to outlast the competition. By keeping their focus narrow, Fred is able to ensure his dealerships get the details right and perfectly tailor their processes to the needs of their immediate customers.

Become an automotive insider in just 5 minutes.

Get the weekly email that delivers transparent insights into the car market.

Join 73,000 others now, it's free:

Interested in advertising with Car Dealership Guy? Drop us a line here.

Want to be considered as a guest on the podcast? Add your name here.